Wheat, canola stocks surprisingly tight in StatsCan report

CNS Canada — Canada’s ag industry was surprised to see some tighter-than-anticipated supply estimates in Statistics Canada’s latest report on stocks of grain and oilseeds Wednesday morning.

StatsCan said Canadian wheat supplies, as of March 31, totaled 16.74 million tonnes — about a million lower than expected, said Mike Jubinville of ProFarmer Canada.

“On the surface, it’s suggesting that we’re using up inventory over the course of the wintertime maybe a little faster than what was anticipated,” Jubinville added.

Increased domestic feed usage for wheat in Canada contributed to the tighter stocks figure. The report showed non-durum feed wheat usage was 4.6 million tonnes between Aug. 1, 2014 and March 31, 2015, up from 3.2 million tonnes during the same period a year earlier.

“This report confirms that there’s a lot more wheat moving into feed channels,” said Jerry Klassen, manager of Swiss-based GAP Grains and Products.

“Given the low values for milling wheat, we’re seeing low-quality, low-protein milling wheat also moving into feed channels in addition to the large feed wheat supplies seen in Alberta and western Saskatchewan last year.”

While more wheat was being used for feed, there was less barley moving into feed channels, the report showed. Feed usage for barley during the 2014-15 crop year totaled 4.1 million tonnes as of March 31, down from 5.2 million the year prior.

Total supplies of barley as of March 31 were still in line with expectations, at 3.4 million tonnes, as malt barley exports were larger than anticipated.

“Malt barley product exports from Aug. 1 to March 31 were 515,000 tonnes compared to 467,000 tonnes last year,” Klassen said. “This is a bit surprising given the low-quality malt barley crop we had last year.”

Canola eaten up

The total canola supply figure as of March 31 was also surprisingly below expectations, coming in at seven million tonnes, due to a large increase in feed use, waste and dockage.

The report estimated feed, waste and dockage for canola at 649,700 tonnes as of March 31, compared to just 12,500 tonnes last year.

“I think this report tells us that this canola fundamental structure is tighter than what the trade earlier anticipated,” Klassen said. “And if we use this feed, waste and dockage estimate, there’s a potential that the carryout estimates could be trimmed by 200,000 to 300,000 tonnes, maybe as much as 500,000 tonnes.”

Though the canola supply situation looks to be tightening, the ICE Futures Canada canola market had little to no reaction to the report Wednesday morning.

Klassen said traders still need time to fully absorb the news — and it could be factored into prices further down the road.

Jubinville said he thinks the market has already moved past the report, as there is speculation that StatsCan’s balance sheet is out of line.

“I think there are ideas are that supplies are actually bigger; that production is understated by StatsCan and will get corrected down the road,” he said.

“It’s an offset to this lower stock number, and as a consequence, doesn’t really move the market at all.”

Total stocks of corn for grain at March 31 were down almost 19 per cent at 6.5 million tonnes, while overall soybean stocks were up 45 per cent at a record-high 2.1 million tonnes.

Total stocks of oats as of March 31 were down 27 per cent from the same point last year, at 1.6 million tonnes, mainly on a 29 per cent decline in on-farm stocks, StatsCan said. Flaxseed stocks rose 3.1 per cent, to 395,000 tonnes.

— Terryn Shiells writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting. Includes files from AGCanada.com Network staff.